Construction growth continues in August

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Australian construction has maintained its growth in August, albeit at a slower rate than July.

August -PCI-results

The monthly Australian Performance of Construction Index (PCI) gave a reading of 55.3 for August (with readings above 50 indicating growth). Although positive news, the result does represent a 5.2 point decline from July’s figures.

The bulk of the growth can be attributed to the house-building sector, which jumped 5.9 points to 56.5, and the engineering construction sector which saw its elevated growth levels sustained.

The index’s authors had mixed reactions to the results. The Ai Group noted the slowing of expansion, but pointed to the record-high rates it was contracting from. The group also noted the high number of infrastructure projects on the horizon.

"While there was some pull-back in the pace of growth, construction sector activity, employment and new orders all lifted again in August," Ai Group head of policy Peter Burn says.

"Housing and engineering construction were the major sectoral contributors with activity in apartment building falling and commercial construction treading water after the dizzy heights reached in July.

"The very solid pipeline of infrastructure work is providing a major boost to the overall economy and is picking up at least some of the slack left by the retreat of mining-related investment," Burn says.

The Housing Industry Association was more pessimistic in its outlook, lamenting the drop in apartment construction.

"August's Australian PCI contains mixed results for housing activity – growth continued on the detached house side while apartments slipped backwards," HIA senior economist Shane Garrett says.

"HIA's latest forecasts envisage further large declines in new apartment building over the next few years.

"The more challenging conditions facing residential building in Australia were underlined by yesterday's GDP figures which revealed a second consecutive contraction in new dwelling construction activity during the June 2017 quarter.

"The downturn in new residential building is set to continue unfolding over the next couple of years," Garret adds.


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